Annual report pursuant to Section 13 and 15(d)

Franchising, Marketing and Reservation Activities

v3.22.4
Franchising, Marketing and Reservation Activities
 12 Months Ended
Dec. 31, 2022
Franchisors [Abstract]  
Franchising and Marketing and Reservation Activities
10. FRANCHISING, MARKETING AND RESERVATION ACTIVITIES
Royalties and franchise fee revenues on the Consolidated Statements of Income/(Loss) include initial franchise fees of $15 million, $14 million and $20 million in 2022, 2021 and 2020, respectively.
In accordance with its franchise agreements, the Company is generally contractually obligated to expend the marketing and reservation fees it collects from franchisees for the operation of an international, centralized, brand-specific reservation system and for marketing purposes such as advertising, promotional and co-marketing programs, and training for the respective franchisees.
Development Advance Notes
The Company may, at its discretion, provide development advance notes to certain franchisees/hotel owners in order to assist them in converting to one of its’ brands, in building a new hotel to be flagged under one of its’ brands or in assisting in other franchisee expansion efforts. Provided the franchisee/hotel owner is in compliance with the terms of the franchise/management agreement, all or a portion of the development advance notes may be forgiven by the Company over the period of the franchise/management agreement. Otherwise, the related principal is due and payable to the Company. In certain instances, the Company may earn interest on unpaid franchisee development advance notes.
The Company’s Consolidated Financial Statements include the following with respect to development advances:
Consolidated Balance Sheets:
 As of December 31,
2022 2021
Other non-current assets
 $ 144  $ 108 

Consolidated Statements of Income/(Loss):
 Year Ended December 31,
2022 2021 2020
Forgiveness of notes (a)
$ 12  $ 11  $ 9 
Bad debt expense related to notes 1  1  1 
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(a)    Amounts are recorded as a reduction of royalties and franchise fees and marketing, reservation and loyalty revenues.